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Financial Services Law Insights and Observations


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  • FFIEC releases 2020 HMDA data

    Federal Issues

    On March 31, the CFPB announced the release of the 2020 HMDA loan application register (LAR) data. The LAR data, available on the Federal Financial Institutions Examination Council’s HMDA Platform, contains modified loan-level information on approximately 4,400 HMDA filers. The Bureau also announced plans to produce the 2020 HMDA data “in other forms to provide users insights into the data, including a nationwide loan-level dataset,” which “will provide all publicly available data from all HMDA reporters, aggregate and disclosure reports with summary information by geography and lender,” and allow users to create custom datasets and reports. The Bureau also stated that it will publish a Data Point article highlighting key trends in the annual data.

    Federal Issues CFPB HMDA Mortgages FFIEC

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  • Fed formalizes stance on supervisory guidance

    Agency Rule-Making & Guidance

    On March 31, the Federal Reserve Board issued a final rule codifying the Interagency Statement Clarifying the Role of Supervisory Guidance issued by the CFPB, FDIC, NCUA, and OCC on September 11, 2018 (2018 Statement). As previously covered by InfoBytes, an October 2018 joint proposal amended the 2018 Statement by (i) clarifying that references in the 2018 Statement limiting agency “criticisms” includes criticizing institutions “through the issuance of [matters requiring attention] and other supervisory criticisms, including those communicated through matters requiring board attention, documents of resolution, and supervisory recommendations”; and (ii) adding that supervisory criticisms should be “specific as to practices, operations, financial conditions, or other matters that could have a negative effect on the safety and soundness of the financial institution, could cause consumer harm, or could cause violations of laws, regulations, final agency orders, or other legally enforceable conditions.” The final rule is effective 30 days after publication in the Federal Register, and mirrors final rules issued by the CFPB, OCC, FDIC, and NCUA.

    Agency Rule-Making & Guidance Federal Reserve Supervision Examination Enforcement

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  • FinCEN seeks comments on beneficial ownership reporting

    Financial Crimes

    On April 1, FinCEN issued an advanced notice of proposed rulemaking (ANPRM) seeking comments on a range of issues related to the implementation of the beneficial ownership information requirements under the Corporate Transparency Act (CTA). As previously covered by InfoBytes, the CTA is included within the Anti-Money Laundering Act of 2021, which was enacted in January as part of the National Defense Authorization Act for Fiscal Year 2021. Among other things, the ANPRM requests comments on reporting procedures and standards for entities to submit information to FinCEN about their beneficial owners, as well as input on FinCEN’s implementation of related CTA provisions “that govern FinCEN’s maintenance and disclosure of beneficial ownership information subject to appropriate protocols.” According to FinCEN, the CTA amended the Bank Secrecy Act “to require corporations, limited liability companies, and similar entities to report certain information about their beneficial owners (the individual natural persons who ultimately own or control the companies).” The CTA also requires FinCEN to develop a secure, non-public database to house collected beneficial ownership information, and authorizes FinCEN to disclose beneficial ownership information to several categories of recipients, including federal law enforcement. Moreover, FinCEN is required to revise existing financial institution customer due diligence regulations concerning beneficial ownership to incorporate the new direct reporting of beneficial ownership information.

    Comments on the ANPRM should be submitted by May 5.

    Financial Crimes FinCEN Agency Rule-Making & Guidance Of Interest to Non-US Persons Anti-Money Laundering Act of 2020 Anti-Money Laundering Bank Secrecy Act Beneficial Ownership

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  • U.S.-EU release statement on Joint Financial Regulatory Forum

    Financial Crimes

    On March 24 and 25, EU and U.S. participants, including officials from the Treasury Department, Federal Reserve Board, CFTC, FDIC, SEC, and OCC, participated in the U.S.-EU Joint Financial Regulatory Forum to discuss topics of mutual interest, including those related to (i) “next steps” for Covid-19 recovery and for mitigating financial stability risks; (ii) “sustainable finance”; (iii) banking and insurance multilateral and bilateral engagement; (iv) capital market regulatory and supervisory cooperation; (v) regulatory and supervisory developments pertaining to financial innovation, including the importance of promoting ongoing “responsible innovation and international supervisory cooperation”; and (vi) anti-money laundering and countering the financing of terrorism (AML/CFT) issues, including “the potential for enhanced cooperation to combat money laundering and terrorist financing bilaterally and in the framework of [the Financial Action Task Force].” Participants also discussed possible responses to climate-related financial risks, as well as “the progress in their respective legislative and supervisory efforts to ensure a smooth transition away from LIBOR.”

    Financial Crimes Department of Treasury OFAC EU Of Interest to Non-US Persons Covid-19 Climate-Related Financial Risks Fintech Anti-Money Laundering Combating the Financing of Terrorism LIBOR

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  • DFPI sanctions former PACE solicitor under California Consumer Financial Protection Law

    State Issues

    On March 30, the California Department of Financial Protection and Innovation (DFPI) announced it has permanently banned an individual and three companies he owns or controls for allegedly evading Property Assessed Clean Energy (PACE) laws. According to DFPI, the respondents, among other things, engaged in unfair and deceptive marketing tactics by “marketing their product as a ‘no-cost’ government-funded program” and “using an unenrolled company to advertise and solicit consumers for PACE financing.” DFPI claimed the respondents offered and sold PACE financing without enrolling with a PACE program administrator, failed to clearly and accurately inform consumers about how PACE financing works, and “misled consumers about their relationships with public agencies, lenders, PACE program administrators, and each other.” Under the terms of the consent order, the respondents agreed to cease and desist from offering PACE financing to consumers, agreed not to use “PACE” in business names, websites, marketing materials, or construction communications, and agreed not to seek future enrollment with any PACE program administrator.

    State Issues State Regulators PACE Programs Enforcement CCFPL

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  • NY AG obtains $53 million judgment against company selling debt relief on student loans


    On March 30, the U.S. District Court for the Southern District of New York entered a default judgment and order against a student debt relief company, which requires the payment of $53 million in statutory penalties, after the defendant failed to respond to a suit filed by the New York attorney general. The AG alleged that the defendant sold debt-relief services to student loan borrowers that violated several laws, including the state’s usury, banking, credit repair, and telemarketing laws, and the federal Credit Repair Organizations Act and the Telemarketing Sales Rule. In addition to the $53 million penalty, the order permanently bans the defendant from engaging in debt-relief activities, collecting on loans related to its debt relief products or services, or using any personal information it has for student borrowers. The court also ordered the defendant to turn over financial records and authorized the AG’s office to seek additional restitution and disgorgement on the basis of those records. The order follows a 2020 stipulated judgment entered against other defendants in the action, which included a $5.5 million judgment (covered by InfoBytes here).

    Courts State Issues State Attorney General Student Lending Debt Relief Usury Telemarketing Sales Rule

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  • FDIC issues 2021 Consumer Compliance Supervisory Highlights

    Federal Issues

    On March 31, the FDIC released the spring 2021 edition of the Consumer Compliance Supervisory Highlights, intended to provide information and observations related to the FDIC’s consumer compliance supervision of state non-member banks and thrifts in 2020. Topics include:

    • A summary of the FDIC’s supervisory approach in response to the Covid-19 pandemic, including efforts made by banks to meet the needs of consumers and communities;
    • An overview of the most frequently cited violations (approximately 74 percent of total violations involved TILA, Truth in Savings Act, Flood Disaster Protection Act, EFTA, and RESPA), as well as other consumer compliance examination observations related to RESPA, TRID, and fair lending;
    • Information on regulatory developments, such as Community Reinvestment Act and flood insurance rulemaking and small-dollar loan programs;
    • A summary of consumer compliance resources available to financial institutions; and
    • Examples of practices that may be useful to institutions in mitigating risks.

    Federal Issues FDIC Bank Supervision Examination Compliance

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  • Court rules incomplete loss mitigation application does not carry foreclosure protections


    On March 19, the U.S. District Court for the Northern District of Ohio granted a mortgage lender’s motion for summary judgment, rejecting allegations that it had violated RESPA and Regulation X in handling plaintiffs’ loss mitigation application. The plaintiffs executed a promissory note and mortgage with the lender in 2017 and then initiated a loss mitigation application the following year. To complete the loss mitigation application process, the lender requested documents and information from the plaintiffs. The lender filed a foreclosure action after informing the plaintiffs that “required documents ‘remain outstanding.’” The plaintiffs filed suit, alleging the lender mishandled their loss mitigation application by, among other things, (i) failing to exercise reasonable diligence in obtaining documents and information to complete the loss mitigation application; (ii) failing to provide “the correct notices regarding the receipt of documents or with notice of a reasonable date by which Plaintiffs were required to submit additional documents to complete the loss mitigation application”; (iii) failing to evaluate the complete loss mitigation application for all available loss mitigation options within 30 days; (iv) requesting documents already received or impossible to obtain; and (v) filing a foreclosure action against the plaintiffs even though the loss mitigation application was either complete or facially complete.

    The court disagreed, ruling that the lender “did not violate RESPA or Regulation X in either the handling of Plaintiffs’ loss mitigation application or in filing foreclosure litigation against Plaintiffs” because, among other things, “[t]here is no genuine issue of material fact that Plaintiffs did not comply with [the lender’s] request for additional information” and that “a complete, or even facially complete, loss mitigation application was not pending in this matter at the time of the filing of the foreclosure action.” As such, because an incomplete loss mitigation application does not carry foreclosure protections, the filed foreclosure action was not improper, the court wrote.

    Courts RESPA Regulation X Loss Mitigation Mortgages

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  • FTC to ban “deceptive” mobile-banking app

    Federal Issues

    On March 29, the FTC announced a proposed stipulated final order against the operators of a mobile banking app to settle allegations that the defendants deceived users about their supposedly high-interest bank accounts and falsely promised users “24/7” access to their funds. As previously covered by InfoBytes, the FTC alleged, among other things, that the defendants represented that users would receive “‘minimum base’ interest rates” of at least 0.2 percent or 1.0 percent, but that users actually received a starting interest rate of 0.04 percent and stopped earning any interest if they requested that their funds be returned. The FTC also claimed that while the defendants promised users 24/7 access to their funds and represented they could make transfers out of their accounts and receive requested funds within three to five business days, some users waited weeks or months to receive funds despite repeated complaints to the defendants, while other users stated they never received their money.

    The proposed stipulated final order bans the defendants from operating or advertising a mobile banking app or any other product or service that can be used to deposit, store, or withdraw funds, and prohibits them from misrepresenting the interest rates, restrictions, and other aspects of any financial product or service. Additionally, the defendants must issue full refunds, including interest, to all customers. The FTC vote approving the stipulated final order was 3-1, with Rohit Chopra, President Biden’s nominee to head the CFPB, voting no. Commissioner Chopra has not published a statement explaining his vote.

    Federal Issues FTC Enforcement Mobile Banking Consumer Finance Deceptive UDAP

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  • FFIEC releases 2021 HMDA reporting guide

    Agency Rule-Making & Guidance

    On March 30, the FDIC issued FIL-21-2021 announcing the Federal Financial Institutions Examinations Council’s issuance of the 2021 edition of the “Guide to HMDA Reporting: Getting It Right!” The guide applies to HMDA data collected in 2021 that will be reported to supervisory agencies by March 1, 2022, and includes (i) a summary of responsibilities and requirements; (ii) directions for assembling the necessary tools; and (iii) instructions for reporting HMDA data. According to the announcement, the 2021 edition provides information to assist with HMDA compliance in the event of a merger or acquisition, as well as updates to the appendices that reflect amendments to Regulation C made by a CFPB final rule published last year (covered by InfoBytes here). The final rule increased the permanent threshold from 25 to 100 loans starting July 1, 2020, for both depository and nondepository institutions, and also increased the permanent threshold for collecting and reporting data about open-end lines of credit from 100 to 200. The latter change, however, will not take effect until January 1, 2022, when the current temporary threshold of 500 open-end lines of credit expires.

    Agency Rule-Making & Guidance FDIC FFIEC HMDA CFPB Regulation C Mortgages

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